Exxon 2015 Annual Report Download - page 41

Report of Independent Registered Public Accounting Firm
To the Shareholders of Exxon Mobil Corporation:
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Consolidated
Balance Sheets of Exxon Mobil Corporation and its subsidiaries as of December 31, 2015 and 2014, and the related Consolidated Statements
of Income, Comprehensive Income, Changes in Equity, and Cash Flows for each of the three years in the period ended December 31, 2015, and
in our report dated February 24, 2016, we expressed an unqualified opinion thereon. The consolidated financial statements referred to above
(not presented herein) appear in ExxonMobil’s 2015 Financial Statements and Supplemental Information booklet.
In our opinion, the information set forth in the accompanying condensed consolidated financial statements (pages 41-43) is fairly stated,
in all material respects, in relation to the consolidated financial statements from which it has been derived.
Dallas, Texas
February 24, 2016
Summary of Accounting Policies and Practices
The Corporation’s accounting and financial reporting fairly reflect its straightforward business model involving the extracting, refining, and
marketing of hydrocarbons and hydrocarbon-based products. The preparation of financial statements in conformity with U.S. Generally
Accepted Accounting Principles (GAAP) requires management to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues, expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.
The summary financial statements include the accounts of those subsidiaries the Corporation controls. They also include the Corporation’s
share of the undivided interest in certain Upstream assets, liabilities, revenues, and expenses. Amounts representing the Corporation’s interest
in the net assets and net income of entities that it does not control are included in “Investments, advances, and long-term receivables” on the
Balance Sheet and “Income from equity affiliates” on the Income Statement.
The “functional currency” for translating the accounts of the majority of Downstream and Chemical operations outside the United States is
the local currency. The local currency is also used for Upstream operations that are relatively self-contained and integrated within a particular
country. The U.S. dollar is used for operations in countries with a history of high inflation and certain other countries.
Revenues associated with sales of crude oil, natural gas, petroleum, and chemical products are recognized when the products are delivered
and title passes to the customer.
Inventories of crude oil, products, and merchandise are carried at the lower of current market value or cost (generally determined under the
last-in, first-out method – LIFO). Inventories of materials and supplies are valued at cost or less.
The Corporation makes limited use of derivative instruments. When derivatives are used, they are recorded at fair value, and gains and losses
arising from changes in their fair value are recognized in earnings.
The Corporation’s exploration and production activities are accounted for under the “successful efforts” method. Depreciation, depletion, and
amortization are primarily determined under either the unit-of-production method or the straight-line method. Unit-of-production rates are
based on the amount of proved developed reserves of oil, gas, and other minerals that are estimated to be recoverable from existing facilities.
The straight-line method is based on estimated asset service life.
The Corporation incurs retirement obligations for certain assets at the time they are installed. The fair values of these obligations are recorded
as liabilities on a discounted basis and are accreted over time for the change in their present value. The costs associated with these liabilities are
capitalized as part of the related assets and depreciated. Liabilities for environmental costs are recorded when it is probable that obligations
have been incurred and the amounts can be reasonably estimated.
The Corporation recognizes the underfunded or overfunded status of defined benefit pension and other postretirement plans as a liability or
asset in the balance sheet with the offset in equity, net of deferred taxes.
A variety of claims have been made against ExxonMobil and certain of its consolidated subsidiaries in a number of pending lawsuits and
tax disputes. For further information on litigation and tax contingencies, see Notes 16 and 19 to the Consolidated Financial Statements in
ExxonMobil’s 2015 Financial Statements and Supplemental Information booklet.
The Corporation awards share-based compensation to employees in the form of restricted stock and restricted stock units. Compensation
expense is measured by the price of the stock at the date of grant and is recognized in income over the requisite service period.
Further information on the Corporation’s accounting policies, estimates, and practices can be found in ExxonMobil’s 2015 Financial Statements
and Supplemental Information booklet (Critical Accounting Estimates and Note 1 to the Consolidated Financial Statements).
Financial Information
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